rewrite this title and make it good for SEOTech View: Nifty’s near-term trend weak; breakout above 23,350 may trigger upside bounce. How to trade on Thursday

A small red candle was formed on the daily chart of Nifty on Wednesday, with minor upper and lower shadows. This market action usually signals a choppy movement in the market with a positive bias.

The negative chart pattern like lower tops and bottoms is intact and the present pullback could be in line with the new lower top of the pattern. But the lower top reversal needs to be confirmed at the highs. The near-term trend of the Nifty is still weak. A sustainable move above the hurdle 23,300-23,350 levels could further strengthen the upside bounce in the market. At the lows, 23,050 is going to be a crucial support for the market, said Nagaraj Shetti of HDFC Securities.

According to the open interest (OI) data, the highest OI on the call side was observed at 23,300 and 23,200 strike prices, while on the put side, the highest OI was at 23,200 strike price followed by 23,100.

What should traders do? Here’s what analysts said:

Jatin Gedia, Mirae Asset Sharekhan

Nifty opened the gap-up and consolidated during the day to close in the green up ~37 points. It is in a temporary relief rally after a sharp decline in the previous five trading sessions. The counter-trend bounce can take the Nifty towards 23,350, which is the 40-hour moving average. Traders should look for signs of weakness around the resistance zone 23,350 – 23,370 and can go short with a stoploss of 23,500. On the downside, the immediate support zone is placed at 23,050 – 23,000 with a potential to slip towards 22,670. A move beyond 23,500 can lead to a deeper retracement towards 23,670.

Rupak De, LKP Securities

Another day of choppy trades was witnessed as the market lacked direction. However, sentiment is likely to favour a recovery in the short term, with the potential to reach 23,400 on the higher end. The sentiment is expected to remain positive as long as the market stays above 23,000. A buy-on-dips strategy appears to work well in the current scenario.

Satish Chandra Aluri of Lemonn Markets Desk

Technically, the Nifty 50 is looking very weak with prospects of a further breakdown, although RSI indicates that near-term conditions look oversold. Expect 23,000 as key psychological support with the next support around 22,800.

Praveen Dwarakanath, Hedged.in

The Nifty index, although it broke its previous day’s high, has formed a Doji candle closing below its opening, indicating weakness in the index. The index is trading well below the 20-day moving average, indicating weakness in the index to continue. Any bounce in the index can be used to sell the index. The momentum indicators are well below the oversold region, which can act as a reason for a dead cat’s bounce in the index from the current level. Options writer’s data for the January monthly expiry showed increased writing of the calls at the 23,200 and above levels, indicating mild bearishness in the index.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)